Alarm bells ringing over green paper on pensions

THERE is no doubt that a national “conversation” about pensions is long overdue with so many defined-benefit schemes known to be heavily in deficit.

PUBLISHED: PUBLISHED: 00:01, Tue, Feb 21, 2017

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A national 'conversation' about pensions is long overdue

The “black hole” has now topped £1trillion and led to the inevitable conclusion that these pensions are simply too costly to maintain without some sort of reform.

But a green paper from the Department for Work and Pensions suggesting that companies which are in difficulties should be allowed to ditch gold-plated final salary schemes is going to sound alarm bells.

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This will mean companies having the legal right to break promises they made to staff and it could affect as many as 11 million employees.

Savers’ total retirement income could be slashed by as much as 30 per cent under an option known as “conditional indexation”.

A green paper is very much a discussion document so it is to be hoped that employees’ concerns can be fully addressed at the same time as the black hole can be plugged.

Put that way it sounds like an impossibility for what benefits a company will be to the detriment of the staff. But the present situation is untenable.

That is something that everyone must be agreed upon. Normally one demands swift action from governments but this is one case where it is imperative that decisions are made with immense care and attention to detail.

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Hopefully a green paper will address employees' concerns as well as plug the black hole